Tax Deduction for Commercial Building Designers

The Energy-Efficient Commercial Buildings Tax Deduction incentivizes designers to meet or exceed an agency’s energy reduction requirements for new and existing buildings.
The Energy Policy Act of 2005 allows building owners to receive a tax deduction (codified in the 26 U.S.C. § 179D) for expenses incurred for qualified energy-efficient building investments.

In government-owned buildings, the government may allocate this deduction to the person(s) primarily responsible for designing the improvements. The deduction may be taken in the year the energy-efficient improvements are placed in service.

The Consolidated Appropriations Act, 2021, H.R. 133, made the 179D energy efficient commercial buildings federal tax deduction permanent, updated standards, and added an inflation adjustment to property placed in service after December 31, 2020.

Obtaining the Deduction

Before the U.S. General Services Administration (GSA) allocates the deduction, the Contractor must:

1. Submit the Letter Of Intent (LOI) and certification Appendix A [PDF - 109 KB] to 179d@gsa.gov. Include a one-page complete project description with the energy efficiency improvements and a separate written verification from the GSA Project Manager that the project was completed according to the project description.
2. After the Office of Facilities Management (OFM) verifies and signs the LOI and Appendix A, the contractor must receive a Third-Party Certification as required by the Internal Revenue Service (IRS) signed by a licensed professional engineer which includes the maximum per-square-foot deduction amount for which the Contractor qualifies.
3. Submit the Third Party Certification with the signed deduction allocation form Appendix B [PDF - 92 KB] to 179d@gsa.gov.

Learn more about how GSA promotes the efficient use of energy and procure cost-effective and environmentally responsible utilities in their buildings by visiting www.gsa.gov.

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